Big technology stocks had a challenging September, and their performance could continue to weigh down the broader market unless positive developments emerge. Analysts at Melius Research, such as Ben Reitzes, suggest that two companies, Nvidia and International Business Machines (IBM), have the potential to reverse this downward trend.
Nvidia: A Leader in Artificial-Intelligence Technology
The case for investing in Nvidia (NVDA) is straightforward. As spending on artificial-intelligence technology increases, Nvidia is poised to be the primary beneficiary. In recent days, bullish calls for Nvidia have been flooding in from Wall Street analysts. These experts believe that the stock will resume its upward trajectory after a period of consolidation.
Reitzes explains, “We believe investors are no longer satisfied with qualitative indicators such as ‘pipelines’ and ‘levels of engagement.’ As of now, it appears that only Nvidia and a few AI server companies possess concrete AI figures.”
To regain momentum, Nvidia needs to demonstrate that major cloud-computing companies are increasing their investments in its graphics-processing units. For investors seeking a catalyst, Reitzes suggests paying attention to Microsoft’s (MSFT) capital-expenditure guidance, which will be disclosed in late October alongside the company’s fiscal first-quarter results.
Nvidia Stock: A Promising Investment
Reitzes, a renowned analyst in the field, maintains a Buy rating on Nvidia stock, with a target price of $730. Impressively, the shares have shown remarkable growth this year, having more than tripled. Currently, in premarket trading, the stock is up by 0.5% and priced at $450.12.
IBM: An Opportunity for Savvy Investors
In contrast to consensus opinions, IBM (IBM) has not seen much action in the stock market this year. Nevertheless, Reitzes believes that an opportunity lies within the recent stock drop caused by investor insecurity following an earnings miss from its consultancy rival, Accenture (ACN).
Reitzes argues that IBM’s divergence from Accenture is due to the consulting demand associated with its own software offerings. Taking all of this into account, Reitzes maintains a Buy rating for IBM, with a target price of $175. In premarket trading, the stock is up by 0.3%, currently priced at $141.23.
Analysts and the Bullish View on IBM
While Reitzes’ bullish stance on IBM may be in the minority among analysts polled by FactSet, he has recently been joined by his peers at RBC Capital Markets. They have initiated coverage on IBM with an Outperform rating and a target price of $188.
In conclusion, Nvidia stock continues to show strong potential, with Reitzes’ positive outlook being shared by many in the industry. On the other hand, IBM may be experiencing a temporary setback, but Reitzes and his fellow analysts believe it presents a unique opportunity for investors.